In June, word leaked that FedEx would no longer deliver Amazon packages by air, and today, both companies confirmed they were ending their ground-delivery contract as well.
Amazon has relied more heavily on UPS and USPS than on FedEx anyway, but as the Washington Post pointed out in June, the lack of an air contract with FedEx could hurt Amazon during the holidays “if it sees a flood in last-minute orders and needs extra capacity.”
Meanwhile FedEx is actually ramping up its ecommerce ambitions. Without the demands of Amazon, could FedEx actually offer improved service to other merchants and retailers? FedEx had specifically called out Target, Walgreens, and Walmart in a statement to EcommerceBytes in June when it said it had the capacity to serve thousands of retailers in the ecommerce space.
FedEx is also moving to 7-day residential delivery year-round and is ditching USPS for FedEx SmartPost deliveries and adding large-package capabilities, as it previously announced.
Amazon’s stealth pilot program may have a lot to do with FedEx’s decision to cut the ecommerce giant loose – Amazon is offering sellers shipping services in certain geographies, picking up and delivering orders to customers – even those received through other channels such as eBay or Walmart.
CNBC published statements from Amazon and FedEx in reaction to today’s news.
It’s no secret that Amazon has built up fearsome logistics capabilities, but will it be able to handle the crush of packages during the upcoming holiday shopping season?
And will sellers feel comfortable using “Amazon Shipping” if it emerges as a viable shipping carrier in the United States?
Update 8/7/19: Amazon Senior Vice President of Worldwide Operations Dave Clark responded to Bloomberg’s story on Twitter, writing:
“Nothing but respect for FedEx but they were very small piece of our network and vice versa, we wish them nothing but the best (conscious uncoupling at its finest).We have great strategic partners who are part of our long term plan and we appreciate what they do for customers.”
The USPS loves losing money on big deals so it’s a sure bet they’ll lower prices to help Amazon. The rest of us should brace ourselves for another retail mail price hike to pay for it though.
Well we just got a package that was ordered yesterday. We live way out in the sticks. It was delivered in a van marked Amazon and the guy delivering it was in uniform with an ID pinned on his collar. Can Amazon deliver without FedEx, the question should be can the Post Office survive without Amazon.
Personally, I’m surprised that Amazon hasn’t already created their own delivery service.